ISLAMABAD – Pakistan is planning to launch its first Chineseyuan-denominated bond, also known as Panda bond, in the first quarter ofnext year, reported a local media house.link
According to details, the bond’s worth will about $1 billion, reflecting agrowing demand for the country’s debt as its economic outlook improved.
“Pakistan is moving closer to debut Chinese bond sale. This will be thefirst time that the government will be assessing the Chinese capitalmarket, which is the third largest bond market in the world,” MuhammadAurangzeb, president and chief executive officer of Habib Bank Limited,told the media house.
He said the finance ministry plans to issue the bond as soon as it obtainscredit ratings from the Chinese agencies. The rating creation process couldtake a couple of months, stated the report.
He noted that “HBL is assisting the government of Pakistan in launching theinaugural Panda Bond issue… we will be ready to ‘press the button’ with thegovernment, in the first quarter of 2020.”
The CEO stated that the size of the planned Panda bond offering was likelyto be $1 billion equivalent CNY, with the first tranche expected to be $350million equivalent CNY. The consortium of four banks, HBL, Citibank, CITICand CDB, was working on the deal as financial advisor and lead manager.
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In response to a query about the beginning of roadshows and book buildingprocess of the issuance and expected yields, he said it was too early tocommit either to a schedule or any expected yield. It will be decided closeto the issuance date.
“At the beginning, the bond could be targeted at the institutionalinvestors to tap demand for this issuance. Banks and insurance companiesare likely to buy this paper,” the HBL CEO said. “But it is expected togain appeal from individual investors later.”
Besides, Aurangzeb believes there was a good window to issue Eurobond/Sukukin the international debt market as well. “No doubt that it’s the best timeto enter the international debt market due to monetary easing by theworld’s major central banks,” HBL chief said.
“Investors were seeking out higher-yielding assets to generate returns asthe European Central Bank was expected to deliver quantitative easing andthe US Federal Reserve has reduced interest rates.”
